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WAEC Financial Accounting 2014 Question 4

Question 4

Final Accounts of a Sole Trader

An example of a credit entry in a profit and loss account is

  1. A.carriage inwards.
  2. B.carriage outwards.
  3. C.discounts allowed.
  4. D.discounts received.
Show the answer and explanation

Answer: D (discounts received.)

Explanation

Discounts received are a gain, so they are credited to the profit and loss account. Carriage and discounts allowed are expenses (debits).